Ofgem: the industry regulator
Following initial falls in prices following privatisation, from 2000 energy prices began to rise in real terms.1 The Domestic Gas and Electricity (Tariff Cap) Act 2018; House of Commons Briefing Paper 17 Aug 2018 Ofgem, the Office of Gas and Electricity Markets, was set up in March 2000 to replace the separate regulatory bodies for the gas and electricity industries and unify their functions. The main functions of Ofgem are promoting competition in all parts of the gas and electricity industries and regulating them. Its principal objective is to protect the interests of existing and future electricity and gas consumers. Ofgem’s regulatory functions include granting licences, monitoring performance, regulating the areas where competition is not so effective (such as the monopoly on pipes and wires) and determining the strategy for the fuel industry.
The Domestic Gas and Electricity (Tariff Cap) Act 2018 introduced a price cap which came into force on 19 July 2018. The Act’s primary focus is to protect consumers on default tariffs. Ofgem is required regularly to review the level of the cap and, towards the end of the initial period, to review market conditions more widely.
Ofgem has the power to fine energy companies for regulatory breaches. Those requirements are principally set out in the Electricity Act 1989, Gas Act 1986 and regulated company licenses, and include rules on sales practices and complaint handling.